With big lenders requiring co-signers, international students are finding that money is tight. For many, B-school dreams may be over before they start

A quick phone call to the Johnson School confirmed what Sahni had been dreading—the popular CitiAssist loan program that many international students depend on to fund their business school education had been pulled. Making matters worse, the school told him they had not yet announced a replacement loan provider. A spokeswoman for the school said last week that the school was working on finding a new program, but hadn't yet finalized a deal.

"I was banking on using the CitiAssist loan program," says Sahni, who is now exploring alternative ways to pay for business school. "I worked hard to get into business school, got in, and now, just because of some stupid operational reason, I may not be able to go. That is hard to digest."

Credit Crunch Casualty

A number of leading business schools and graduate programs were dealt a serious blow this fall when big private lenders including CitiAssist and Sallie Mae (SLM) suddenly terminated their popular "no co-signer" student loan programs. The canceled loan programs, which typically allowed applicants to obtain up to $150,000 without a co-signer to assume stewardship of the loan should the borrower default, were a financial lifeline for many international students, many of whom have no other way to finance their MBA educations. They were yet another victim of the credit crunch, which has decimated many private lenders and made those still in business more cautious than ever.

Replacing the loan programs has not proved easy. In the last two months, business schools from the University of Pennsylvania's Wharton School to Cornell's Johnson School have been scrambling to find alternatives for students, most with limited success so far. Of the schools that used to have the CitiAssist loan program—including Harvard Business School, the Wharton School, University of Michigan's Ross School of Business, the Chicago Booth School of Business, Columbia Business School and other leading schools—only MIT's Sloan School of Management has announced a replacement lender. A number of schools said they are hoping to work out new programs by the spring, but did not disclose any further details. Most schools require students to put down a deposit by early April or May, leaving schools with just a few months to find a solution.

For now, the fate of two different groups of students remains up in the air. The withdrawal of the CitiAssist program, run by the Student Loan Corporation (STU), impacts admitted applicants who have not yet enrolled and current first-year students who might have to cut their business school career short next year if they can't find an alternate source of financing. Some schools, like the Ross School of Business, are doing their best to reassure current students that they will be able to come back to school next year. "